Business to Business Advertising and The Recession

Last year we reported on the results of a comprehensive market research study conducted by the giant McGraw-Hill Publishing Company.

The study covered a very large sample of American industrial companies. Companies that cut their advertising budget in the recession years of 1973 and 1974 and those that increased or maintained their advertising budgets in the same period.

The study conclusively proved that the companies maintaining or increasing advertising had a 12% sales growth in ’73, ’74 over the budget cutters. A sales return way over the advertising investment.

What’s more, those companies maintaining or increasing advertising had a sales growth of almost double that of the budget cutters from 1973 all the way through 1978.

Did any of this cosmic information reach and persuade senior industrial management?

For a while, it looked as if it had. Business-to-business advertising investment held up pretty well in 1981.

Lately though, scalpels and even cutlasses have been flashing in the corridors of corporate power in America.

Advertising budgets are being slashed, staff are being reduced.

For some advertising, marketing, and sales people it is a sad, but survivable experience, They’ve been through it before.

For others, in some of the high-tech areas, for example, it’s a new and shocking experience. Rather like being on a suddenly reversed up-escalator.

What’s to be done about it?

Live with it, of course.

After all, there are few among us really prepared to put our rather nice jobs on the line in defense of advertising expenditures opposed by “…the very highest echelons of corporate management.”

Everyone knows what happened to Oscar Wilde when he reportedly uttered the following deathbed remark: “Either this wallpaper goes, or I go”

This is why we propose a motto for these perilous, but hopefully brief times.

If you can’t be brave…be clever.

Clever enough to extract maximal sales effects from minimal budgets. Here are a few ways in which some of our clients are doing exactly that.

Switching from color to black and white advertising and often smaller space units. Same budget but much greater reach and frequency.

Re-designing advertising to secure more and better response. Less corporate image, but more action where it counts – solid leads for sales representative.

Pre-qualifying product information requests by mail and/or telephone before they go to the sales force. Sales may be down, but sales costs are not. For most business-to-business marketers, the cost of a sales call rose to $178.00 last year.

Charging distribution organizations for promotional materials is back in style for some clients. It’s easy enough to give it away in easy time. In difficult times, charging for materials is a good way to loosen up a tight budget. There’s every reason to believe that paid-for materials are lots better used than give-aways.

Direct mail and the telephone as a sales call substitute is being used by more than a few clients. So are catalogues and mini-catalogues, grouping products and services with profit margins too low to merit the expense of personal selling.

Increasing the use of product press releases specifically designed and placed to generate solid sales leads.

Costs little, does a lot.

Systematic press releases are producing solid sales leads. And, it takes very few lead conversions to sales to more than pay for the modest cost of the entire program.

A close look at internal staffing is very much in order for our clever clients these days. They’re keeping the lid on marginally productive marketing communications staff by buying services outside. Appears more expensive at first look, but not on the second when compared to real employee costs in highly socialized countries.

The advertising and promotion of distribution organizations is also being re-examined. In good times, mediocre and even poor marketing communications by distributors are accepted by the manufacturer with a groan, but little else. Not now. In some cases, tighter control over cooperative funds is being used to leverage better quality marketing communications.

Centralization is again a prime subject with our clients and many another clever multi-country marketers. Centralized customer/prospect lists on computer for effective direct mail/marketing. Centrally developed advertising themes and formats and even finished “ads” ready for local placement. Pre-packaged, direct mail programs prepared and mailed centrally to a central computerized customer/prospect mailing list or supplied “ready to mail” to distributors – at cost or gratis.

One out of 9 ways in which we’re helping our clever clients deal with reduced budgets.

If you’re already using some or all but would like a few new ones – just let us know.

Penny Ohlmann Neimann

The Ohlmann Group has a rich history that began in Dayton, Ohio in 1949, where the agency was founded as Penny and Penny by Bob Penny and his wife Jean. In 1964, Walter Ohlmann joined the firm. Ralph Neiman came on in 1969 and the firm became Penny/Ohlmann/Neiman. In 2011, P/O/N was renamed The Ohlmann Group to better reflect the agency's ongoing evolution and collaborative nature.